Category: Industrial Insurance
Small Business Insurance – why the cheapest is not always the best
Are you operating in hospitality, providing accommodation, running a transport business, or operating a cafe?
It can be tempting as a time-poor business owner to choose the cheapest cover you find online. All business owners regardless of their size should be aware of the ins and outs of what’s included in one size fits all policies.
Coverage over price
When purchasing your small business insurance, you need to make sure that you are getting adequate coverage through your insurance policy. Remember you are buying your small business insurance to make sure you are covered if an event was to occur.
Whilst it can be tempting to buy on price, and you certainly need to be comfortable with the price, you need to consider what has been included with your policy and what may have been excluded to enable the lower price.
My mantra I tell all my clients is “coverage over price”
Buying online can lead to under-insurance
Working out the true value of coverage you require for your small business can be tricky. Often it is more than just the property, equipment and stock and can be staff, your business type or category, terminology or other fine-print you don’t think about.
Thinking you are covered and being covered are two different things:
Business Owner Case Study
One client came to me and upon reviewing his business insurance, I was shocked. He ran a business that turned over around $20m per annum. He thought he had good insurance and that all parts of his business were adequately covered. I reviewed his business insurance policy over the weekend and found it was severely lacking. For example, there was machinery in his workshop that would have cost several hundreds of thousands of dollars to replace and were simply not covered by their existing insurance policy. What was most alarming was this business employed more than 30 staff and if the business had been impacted by an insurance event and had not been able to recover, then those staff would have been left in the lurch as well. We highlighted all these shortcomings to the owner and worked with them to ensure that they were adequately covered going forward.
Three Helpful questions to ask:
1: Are you covered adequately? When did you last review your insurance?
2: Do you know what is included and excluded with your business insurance?
3: When did you last use a broker to better understand what is covered and what is lacking with your current insurance policies. They are the experts.
Remember – coverage over price.
3 Steps To Minimize The Impact Of A Hard Insurance Market
The insurance market can at times, be a tough nut to crack, especially when it fluctuates from a soft insurance market to a hard one. When the hard market drops, we see insurers tighten underwriting criteria, coverages become more difficult to secure, premiums aren’t as easy to negotiate on and coverage when it isn’t expensive, can become completely unavailable.
Preparation is the key to success, and while you can prepare yourself for some rate increases in the next few years, it’s often better to take a more proactive approach.
The following three steps will help you minimize the impact of those stringent insurance rating criteria.
1 – Understand the Importance of an Insurance Broker during a hard market
Following advice will only get you so far if you don’t understand why you’re doing what you’re doing. Insurance brokers during a hard market will become your saving grace. Their role is to fight your battles and continuously source competitive services to suit your needs.
In a hard market, it can feel like an insurer is attempting to block your every step with their stringent standards, so having an insurance broker that understands the changes and is prepared to seek out the best result for your business, can ensure your policy will be tailored to your needs and remove the burden from your own shoulders.
This not only makes the process smoother but allows you to focus on your business and do the job you know how to do best, saving you time and frustration.
2 – Develop a good relationship with your insurance broker
Teamwork makes the dream work and a great relationship with your insurance broker will only result in the best outcomes for your business. An insurance broker can only work to the best of their ability if they understand what you want and are hoping to achieve. If either you or your broker aren’t on the same page, it might be best to try another book.
Make sure that your insurance broker understands the impact of the hard market on your business and that they understand your actual business, the industry and its potential risks. A hard insurance market brings new clients to brokers, so take advantage of the competitive arena and make sure your broker has proven their capability to you, above all the rest.
With the right broker and a trustworthy partnership, you will be guaranteed to receive the best price, coverage and policy to secure your business’ future.
3 – Prepare the business for increased insurance costs
“By failing to prepare, you are preparing to fail.” ― Benjamin Franklin
Being aware of the potential for increased insurance costs isn’t the same as actually preparing for the occasion. Insurers need to be proactive and commence their renewal process early to ensure the best outcomes. Present risks in the best light and allow adequate time to address any surprises or consider strategies which may mitigate premium increases, such as increased deductibles.
It can often become a shock when the market turns and many find themselves mentally unprepared for the sudden shift. Pre-emptive action is better than reaction, so prepare your business early.
It’s understandable to start sweating at the mention of insurance premiums on the rise, but there’s plenty to start considering, planning and actioning now to prepare your business for the worst. Taking an active and strategic approach to managing your company’s risks and insurance claims will minimize the impact of a hard insurance market, so it’s best to start sooner rather than later.
I offer a 30-minute business review session. During that session I provide my advice on if and how I can help you minimize the impact of a hard insurance market. To find out more email me at brett@thiedemaninsurance.com.au or phone 0401 109 324.